Starbucks, Anheuser-Busch to create new brand for $1B ready-to-drink tea market

ST. LOUIS, June 2 (UPI) -- One of the largest coffee companies in the United States is teaming up with one of the nation's biggest beer brewers to create a new product that is neither beer nor coffee.

Starbucks and Anheuser-Busch announced the joint venture Thursday, saying they are working to create a new Teavana product line for sale in retail stores. The companies said they will produce, bottle, distribute and market the products.

The companies said they expect the products to launch in the first half of 2017. In 2014, the fast-growing premium RTD tea industry generated $1.1 billion in sales.

Starbucks already sells the Teavana brand in its retail stores.

"Tea has been an important part of Starbucks heritage since we opened our doors," Starbucks CEO Howard Schultz said in a news release Thursday. "When we acquired Teavana in 2012, we saw a unique opportunity to do for tea what Starbucks has done for coffee and expand the Teavana brand across many customer experiences and products. We are excited to work with Anheuser-Busch to unlock the premium ready-to-drink market and further grow demand for the Teavana brand."

"We are excited to work with Anheuser-Busch to unlock the premium ready-to-drink market and further grow demand for the Teavana brand," Starbucks CEO Howard Schultz said Thursday of the company's planned venture with Anheuser-Busch to bottle and distribute Teavana-brand tea in retail stores. File Photo by Alexis C. Glenn/UPI

"This arrangement will bring together the strengths of two great companies," Anheuser-Busch CEO Carlos Brito added. "Starbucks' expertise and leadership in premium tea, combined with our world-class production capabilities and strong U.S. distribution footprint, will position this new product well in what is an exciting and growing category."

The companies cited figures by the Tea Association of the United States in saying Americans drink more than 800 million cups of tea each week -- and that 80 percent of all tea consumed in the country is iced tea. They also noted that the tea industry has a global category size of $125 billion.

Starbucks and Anheuser-Busch said they expect to finalize agreements for the new RTD brand by the end of the year.

Shares of Starbucks (Nasdaq: SBUX) rose 11 percent in trading Thursday, finishing at $54.68. Shares of Anheuser-Busch (NYSE: BUD) declined 77 cents per share to $128.26.